CALI warns of ‘chain reaction’ from DBFO delays

The Council of Australian Life Insurers (CALI) has pushed for action on tranche two of the Delivering Better Financial Outcomes (DBFO) reforms, voicing fears that further delays could have “generational impacts”.

Delays have become something of a feature of the government’s advice reforms, with promises to fix the “hot mess” now almost three years old.

Financial Services Minister Stephen Jones detailed the next package of reforms in Canberra in December 2023, yet close to a year later advisers are still waiting to see draft legislation.

Even after the first DBFO legislation was passed through Parliament, Jones almost immediately signalled that the next round was further away than some in the advice sector might like.

The new timeline, Jones said, was simply the vague description that it would be “developed over the second half of the year”.

In August, Financial Advice Association Australia (FAAA) chief executive Sarah Abood said it felt like progress had “stalled” on tranche two, though did note the FAAA has had some informal meetings with Treasury.

“What we have been advised is that formal consultations are due to take place shortly, and the intent is that we will see legislation for tranche two. Originally, it was around the year, and that date’s been drifting a bit,” Abood said.

According to CALI CEO Christine Cupitt, continued delays on getting the reforms in place are hurting consumers.

“Without these reforms, millions of Australians and their families will be left behind in financial limbo,” Cupitt said.

“Doing nothing won’t just hurt today. It’ll set in motion a chain reaction over the next 10, 20 and even 30 years as many Australians remain priced-out of getting the right advice to secure their financial future and look after their loved ones.”

Pointing to research commissioned by CALI, she noted that the financial advice needs of Australians are not currently being met, adding that more than 40 per cent of Australians want advice that’s more personalised and helps them make a decision about how much cover they need and the products that are best suited to them.

Cupitt has previously made it clear that CALI wants insurers to be allowed to provide simple advice on their own products in order to bridge the advice gap.

Speaking before the Senate economics legislation committee in June, the CEO said the proposed reforms would “help expand Australians’ access to advice and back-in the vital work of financial advisers across the country”.

“As cost-of-living pressures rise, many people are now less certain about their financial situation. They know they need to manage their household balance sheet, and getting professional advice on their life insurance is an important part of that. But this can cost more than $3,000,” she said at the time.

Life insurers are currently unable to legally provide customers with simple advice when they ask for it and are restricted to providing general advice.

“Australians have made it clear. They want these changes, and they want them now more than ever,” Cupitt said.

“People need someone to talk to about their financial future. They’re already dealing with sustained cost of living pressures, we shouldn’t be turning our backs on them as they try to take care of their loved ones.”

She added that the current “advice accessibility crisis” is leaving Australians underinsured and unprotected.

“The barriers to getting advice remain far too high. Australia’s life insurers just want to be able to provide simple advice on their own products when people ask them to, at no extra cost to the customer,” Cupitt added.